The stress on the economy has led to muted growth in advance tax payments by leading corporate houses. The advance tax paid by the top 84 Mumbai-based companies rose by 6 per cent to ₹23,850 crore (₹22,450 crore) in the December quarter, largely due to higher remittances by banks and entities in the financial sector.
In the past, the growth has been in the 10-15 per cent range.
This trend shows that India Inc is waiting for clear signals on a host of issues, including a rate cut from the Reserve Bank of India, key economic legislation, and some big-ticket reforms.
Advance tax payment by companies is a barometer of the economic activity in the country. In most companies, the marginal increase in tax payment in the December quarter this year was on a lower base. In the first three quarters of this fiscal year, the payout by these companies was up 13 per cent at ₹61,610 crore (₹54,560 crore), according to data available with the Income-Tax Department. The tax collection from these companies for the whole of the last fiscal year was ₹75,220 crore.
Manufacturers cut back Given the economic uncertainty, most manufacturing companies, including Tata Steel, ACC, L&T, Grasim Industries, Aditya Birla Nuvo and Lafarge India, have cut back their payouts.
The recent sharp fall in crude prices saw the country’s largest private sector company Reliance Industries pay a marginally higher advance tax of ₹1,605 crore (₹1,570 crore). The tax outgo of State Bank of India and ICICI Bank rose by 26 per cent and 20 per cent, respectively, to ₹1,420 crore (₹1,130 crore) and ₹1,200 crore (₹1,000 crore).
Similarly, HDFC Bank and Bank of India paid more, at ₹1,500 crore (₹1,350 crore) and ₹350 crore (₹200 crore), respectively. However, Bank of Baroda and Citi Bank maintained their tax outgo at last year’s level of ₹575 crore and ₹610 crore, respectively. Insurance behemoth LIC and Deposit Insurance and Credit Guarantee Corporation paid 9 per cent and 66 per cent more tax at ₹1,770 crore and ₹1,620 crore, respectively.